Calgary’s office market demonstrated its resilience and adaptability in a year that was marked with instability. The downtown area recorded two straight quarters of positive absorption, accompanied by a slow but steady trend of declining vacancy. Vacancy in class AA space remains relatively low, as the flight to quality movement continues to gain momentum. This trend significantly influences the decisions of the city’s largest energy sector tenants, and future absorption swings are likely to be affected by several pending legacy lease expirations on the horizon.
Meanwhile, office investment activity picked up, with several transactions occurring at the year’s end for assets with more office use upside rather than residential conversion potential. Additionally, the City of Calgary closed the funding stage of its residential conversion program, announcing the final properties included under the under the initial scope.
Beltline and suburbs rebound
Slow and steady declines in vacancy were observed in both the Beltline and the suburbs as well. The Beltline experienced two consecutive quarters of positive absorption, which contributed to a reduction from the record high vacancy seen in Q2 of this year. However, this submarket still faces challenges as it competes with both downtown and the suburbs, offering only a middle ground between affordability and convenience. Suburban markets have also demonstrated perseverance, recording three consecutive quarters of positive absorption and declining vacancy rates in both the north and south submarkets. Class A suburban spaces continue to experience strong demand and have been the main drivers of activity. These properties offer desirable amenities, along with easy access, ample parking, and proximity to residential areas, making them increasingly attractive to businesses looking to draw more employees to the office.
Our point of view
In the face of continuing economic headwinds, Calgary will continue to rely on its core strengths to navigate through 2024. The market’s resilience is reinforced by positive migration trends and robust energy prices, while its adaptability, demonstrated by the repurposing of office space, is forward thinking and positions the market well for the future
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